An Investor Wants to Invest $50,000 in Two Mutual Funds

question 12

Essay

An investor wants to invest $50,000 in two mutual funds, A and B. The rates of return, risks and minimum investment requirements for each fund are:
$\begin{array}{cccc}\text { Fund } & \text { Rate of return } & \text { Risk } & \text { Minumum investment } \\\hline \mathrm{A} & 12 \% & 0.5 & \$ 20,000 \\\mathrm{~B} & 9 \% & 0.3 & \$ 10.000\end{array}$
Note that a low Risk rating means a less risky investment. The investor can invest to maximize the expected rate of return or minimize risk. Any money beyond the minimum investment requirements can be invested in either fund.
The following is the MOLP formulation for this problem:
$$\begin{array} { l l } \text { Let } & \mathbf { X } _ { 1 } = \text { dollars in investment } \mathbf { A } \\& \mathbf { X } _ { \mathbf { 2 } } = \text { dollars } \text { in investment } \mathbf { B } \\\text { MAX: } & \\\text { MiN: } & 0.12 \mathbf { X } _ { 1 } / 50000 + 0.09 \mathbf { X } _ { 2 } / 50000 \\\text { Subject ta: } & 0.5 \mathbf { X } _ { 1 } / 50000 + 0.3 \mathbf { X } _ { \mathbf { 2 } } / 50000 \\& \mathbf { X } _ { 1 } + \mathbf { X } _ { \mathbf { 2 } } = 50000 \\& \mathbf { X } _ { 1 } \geq 20000 \\& \mathbf { X } _ { \mathbf { 2 } } \geq 10000 \\& \mathbf { X } _ { \mathrm { i } } \geq 0 \text { far all } i\end{array}$$ The solution for the second LP is (X₁, X₂) = (20,000, 30,000).
What formulas should go in cells B2:D11 of the spreadsheet? NOTE: Formulas are not required in all of these cells.
$\begin{array}{|c|l|c|c|c|}\hline &{\text { A }} & \mathrm{B} & \mathrm{C} & \mathrm{D} \\\hline 1 & \text { Problem data } & \mathrm{A} & \mathrm{B} & \\\hline 2 & \text { Expected retum } & 12 \% & 9 \% & \\\hline 3 & \text { Risk rating } & 0.50 & 0.20 & \\\hline 4 & & & & \\\hline 5 & \text { Variables } & \mathrm{A} & \mathrm{B} & \text { Total } \\\hline 6 & \text { Amount invested } & \$ 20,000 & \$ 30,000 & \$ 50,000 \\\hline 7 & \text { Minimum required } & \$ 20,000 & \$ 10,000 & \$ 50,000 \\\hline 8 & & & & \\\hline 9 & \text { Objectives: } & & & \\\hline 10 & \text { Average return } & 10.2 \% & & \\\hline 11 & \text { Average risk } & 0.32 & & \\\hline\end{array}$

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Definitions:

Hostile Aggression

Aggressive behavior that is driven by anger or the intention to harm someone else.

Relational Aggression

A type of aggression that involves damaging someone's relationships or social status, rather than physical violence.

Physical Aggressiveness

Involves the use of physical force with the intention to harm or intimidate others, often as a way of dealing with conflicts or expressing frustration.

Problem Behavior

Actions or conduct that are considered inappropriate, challenging, or disruptive, often requiring intervention to resolve.